There is no longer a choice between sustainability and profitability

Publish date:

Climate change has the potential to fundamentally disrupt businesses models and consumer behaviours; if implemented correctly, strategic transformation allows organisations to alter their business model and become positive change agents, while also achieving their growth objectives.

2020 brought major societal movements and changes. It started with climate change activism, which for a long time was top of the list on every business’ agenda, followed shortly by the coronavirus pandemic. They are having to respond to disruptions of a magnitude that can fundamentally change the relationship between businesses and consumers; the COVID-19 pandemic being an example of a black swan event [1] that researchers and scientists have been warning against for decades, unforeseen and with substantive impact. Similarly, the effects of climate change can already be felt around the world and businesses, financial institutions and governments have been urged by scientists to collaborate and re-build a more sustainable future.

Thus, there is a global call for organisations to create competitive, future-proofed business models that can grow in an equal society and on a green planet and, contrary to traditional belief, impact and growth are no longer in conflict.

To this end, Strategic Transformation is the key to successfully altering an organisation’s business model, while considering its strategy, operating model and the foundational golden thread that must connect all three components to build a better “new normal”; purpose.

The two sides of the sustainability coin: Impact and Growth

Strategic Transformation, the generation of additional organisational and consumer value through substantial alteration across an organisation’s business model, is the key to implementing a business’ strategy objectives, identifying and securing growth opportunities, and addressing misalignment between business model components.

The Capgemini Strategic Transformation Sustainability Wheel (see Figure 1) gives businesses the right tools and methodologies to have positive impact and grow at the same time, which is no longer a pioneering, but a fundamental capability that organisations must build to thrive on a green planet.

Figure 1 The Capgemini Strategic Transformation Sustainability Wheel
Figure 1 The Capgemini Strategic Transformation Sustainability Wheel

The Impact Model offers a lens for organisations to consider and deliver according to their purpose, while positively impacting the rest of the business model. The model holistically assesses the impact of the organisation on environment, the community and the people, constantly building up the organisational resilience to climate change and to the societal changes.

The Growth Model is the transformation of a Business Model to adapt to a changing environment and social infrastructure and increase its profitability. At the same time, it creates a positive change in the environment and the community in which the organisation operates. It helps organisations evolve their business model through Strategic Transformation, implementing sustainability throughout the value chain to drive positive change and value for the customer.

This year has reminded us that occasionally there are moments of rapid and drastic change that the world will inevitably encounter, affecting society, environment and human behaviours. Now is the time to act, to help prevent the warnings of scientists becoming true with climate change as they have done with the COVID-19 pandemic.

Green growth is possible and when implemented at scale it can have exponential positive impact

Climate change is a disruption wave that businesses cannot avoid. As with any disruptor the temptation is to prioritise the mitigation of the potential impact in the short term, rather than take advantage of the opportunity to transform business models for long-term growth. Contrary to historical belief, becoming a sustainably responsible organisation does not simply mean reducing the carbon footprint and cutting costs, as this does little to solve the underlying problem. An organisation that embeds sustainability from strategy to business model will have to get a better understanding of its operations, identify efficiencies, manage waste better and rebuild its relationship with suppliers and customers, driving positive change across the value chain.

In the context of highly complex problems such as tackling climate change, there is a need for holistic, systemic tools that can create exponential positive change. Strategic Transformation applies the concepts of systems thinking to large-scale organisational change and helps ensure that while targeting growth across the business model, sustainability doesn’t act as a blocker but as a great enabler; when done right, it can have long-term positive effects both for the company and for the planet. Unilever is a great example that growth and sustainability are not mutually exclusive.

In 2010 Unilever launched the  Sustainable Living Plan – not a CSR plan, but a strategy for achieving a sustainable business. This was not an independent set of actions; it was a key part of their strategy plan for the decade and was truly embedded through the business model. Unilever’s quest for sustainability helped them achieve much greater visibility of their value chain. By fundamentally altering the way they do business they drove positive change within their own global operation, and within their end-to-end value chain. They redefined their relationships and expectations of suppliers and used their immense brand power to educate and respond to their customers, achieving efficiencies across the board and improving their customer relationships. This is an incredible example of how brands with such power in a globalised society can have an exponential positive impact at all ends of the value chain – customer, their own operation and suppliers.

Make or break: The importance of an unwavering, transparent promise

Transformation alone is unlikely to have the desired long-term impact of truly embedded social change. Transforming your organisation to both adapt to the needs of the community in which it operates for the long term, and to thrive in a green planet, requires ambitious goals and calculated change from within; making the promise of sustainability synonymous to the business culture. It also requires honesty, leadership commitment and careful consideration of clear, public metrics. In this context, Strategic Transformation becomes increasingly important in enabling organisations to re-define the synergies between the business strategy and their business model. Remedying existing misalignment and keeping the purpose of the business at the core of the transformation is the key to creating business models built on empathy and environmental awareness, that are fit for the future and that are not only consumers of resources but also part of the solution.

Climate change is inevitable, but what will set organisations and governments apart in the future is how they respond to this challenge. For far too long sustainability and growth have been considered as mutually exclusive; this is no longer the case. A world of interconnectivity, with positive change at scale benefitting not just businesses but society at large, can be achieved if all participants in the marketplace, including customers, businesses, governments and the financial industry collaborate to support growth in a green planet. The Strategic Transformation toolkit is an important enabler through which organisations can play a winning role in this future.

Green growth is the only path that we can take to avoid having to adapt to another “new normal”.

For further perspectives on sustainability from our Innovation and Strategy team, please see our latest Clean Growth point of view.

[1]From forbes.com [https://www.forbes.com/sites/forbesbooksauthors/2020/03/19/covid-19-is-a-black-swan/?sh=7241f08a7b4b]

[2] From nationalgeographic.com [https://www.nationalgeographic.co.uk/science-and-technology/2020/04/experts-warned-of-pandemic-decades-ago-why-werent-we-ready]

 

Author


Sophia Ambrono

Sophia is a consultant in our Innovation and Strategy team, with experience across financial services, public sector and consumer goods/retail. She has a keen interest in using strategy skills for positive change and helping organisations develop their business models to make them fit for a green planet.

 

Related Posts

Accelerated Solutions Environment

Sustainability is a science not an art; everyone can play a part

Date icon February 9, 2021

Working in partnership with Centrica’s Digital Community to amplify and accelerate their...

Corporate Responsibility & Sustainability

There is a new paradigm for an efficient business process: a sustainable one

Date icon November 5, 2020

Pre-lockdown, sustainability seemed top of everyone’s agenda, with 2020 set to be the ‘year...

Corporate Responsibility & Sustainability

Why Digital Inclusion is at the heart of our response to COVID-19

Lucie Taurines
Date icon October 13, 2020

As we deal with these unprecedented times with state measures to control the spread of the...